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Exchanges Alerts ICO Scams and Illegal Fundraising in China Punishable by Death

24th June, Shenzhen-BTC38, the Shenzhen-based cryptocurrency exchange, released a warning to investors of potential ICO scams. ICOs are going rampant in the last two months. There are quite a number of ICO projects named with “Chain” circulating in the socializing tools like QQ or Wechat group, some of which could not be found in any websites and could only be accessible to so-called insiders. This creates another illusion for newbies or “jiucai(leek)” in the Chinese cryptocurrency community: the fast-track for getting rich is not available for everyone and better to get on board ASAP.

BTC38 released a statement to disperse rumors concerning recent ICOs that promote using the name of the exchange. TLDR version of BTC38 announcement:

1. BTC38 will not list any newly-issued ICO assets. It’s one of the principle of BTC38 not to be the first exchange for any cryptocurrency or assets.
2. BTC38 has never been and will not get involved in the market-making of exchange and staffs are not allowed to get involved as well.
3. BTC38 will publicize plans and open bidding for “renovating coins”.

The announcement also warns investors of fake Wechat or QQ chat log to fool the investors, which is echoed by Yunbi :

“In order to protect the benefit of the investors, YUNBI hereby declares: YUNBI will not promise to list any of the tokens from the ICO projects before the ICO ends. Any blockchain startups using YUNBI’s name to do advertisement, their behaviors would be considered as infringing acts. YUNBI will use legal means to ask for their accountability.”

As pointed out by Biqushi, 10x inflow of cryptocurrency investors are observed recently compared to that of last year as of 20th June.

Summary of new investors as of 20th June. credit:biqushi

Tempted by stories like : The Crazy World of ICOs: 200,000 CNY to 6 Million CNY in 2 Years , the newbies are busy trading instead of educating themselves and doing due diligence research.
In a report released in April by Chinatimes, one of the mainstream media in China, ICO has been more or less described as “raising fund without viable products and institutional backing” and a “shortcut for grey fundraising”. The story cited QTUM as a “deception to outsiders and investors”.
Despite that the authority may implement “regulatory sandbox” for ICOs, , it’s still too early to say that exception could be made amid the crackdown on illegal fundraising. The tolerance for ICOs may come to a sudden halt in China. According to a legal interpretation from a lawyer, illegal fundraising may face death penalty in China .

ICO may help blockchain startups to get much-needed funding for quick establishment and exploration of uncharted area in the realm of blockchain, which are generally helpful to the whole ecosystem. On the other hand, the lack of self-discipline and the lurking scammers may do much damage to the latest fundraising methods.

Learn cryptocurrency and digital assets since 2013 and co-founder of 8btc in 2014. Co-author of 2014-2015 Digital Currency Development Report(2015) and first author of Investment Guidelines To Blockchain Digital Currency (Published in June 2017 ISBN:9787300239286).

COMMENTS(15)

2 years agoBitcoinAllBot

Here is the link to the original comment thread. Or you can comment here to start a discussion. Author: 8btccom

I know fuck-all about Chinese law, but the last two links from the article provided some background:

China’s Criminal Law (1997) criminalize some public fundraising conducts and imposes severe criminal punishments on violators.

and

What the thirteen types of projects have in common is that they use false advertising for nonexistent or exaggerated projects, while promising high returns. These crimes are punishable by death, as evident in several high profile cases, including those of Zeng Chengjie, who raised funds for real estate development, and Liu Haiyan, who owned an investment company and used funds for speculation.

The parent mentioned False Advertising. For anyone unfamiliar with this term, here is the definition:(Inbeta,bekind)

False advertising is the use of misleading, false, or unproven information to advertise products to consumers. One form of false advertising is to claim that a product has a health benefit or contains vitamins or minerals that it in fact does not. Many governments use regulations to control false advertising. A false advertisement can further be classified as deceptive if the advertiser deliberately misleads the consumer, as opposed to making an honest mistake. [View More]

It’s a good call for exhanges not to enlist any newly ICOs as they’d potentially would be pumping the price up on “scam” coins/tokens that has not yet proven itself worthy for a need or the purpose it was made for. With all new ICOs I think this is a good call to see what ICOs survive and deliver as promised before adding anything to an exchange. I really like the three points of BTC38. No listing of newly issued ICOs, exhange nor staff are allowed to involve themselves directly in the market, open and public distribution of news.

We all know exhanges (and staff) involve themself directly in the market to profit off it. They also sit on news and buy up coins (insider-information) before the news are released to the public. The greed of people never stops to amaze me. I want to earn a buck myself, but I’m going to do it the honest, right and hard way – no shortcuts.

Exchanges Alerts ICO Scams and Illegal Fundraising in China Punishable by Death 24th June, Shenzhe-BTC38, the Shenzhen-based cryptocurrency exchange, released a warning to investors of potential ICO scams. ICOs are going rampant in the last two months. There are quite a number of ICO projects named with Chain circulating in the socializing tools like QQ or Wechat group, some of which could not be found in any websites and could only be accessible to so-called insiders. This creates another illusion for newbies or jiucai(leek) in the Chinese cryptocurrency community: the fast-track for getting rich is not available for everyone and better to get on board ASAP. http://news.8btc.com/exchanges-alerts-ico-scams-and-illegal-fundraising-in-china-punishable-by-death